Loan Calculator

Calculate monthly payments, total interest, and total cost for any loan.

$
%
years
$
Monthly Payment
$0
Total Interest
$0
Total Cost
$0

How to Use This Loan Calculator

  1. Enter the loan amount — the total amount you plan to borrow.
  2. Set the interest rate — your annual interest rate or APR from the lender.
  3. Choose the loan term — how long you have to repay (in years).
  4. Add extra payments (optional) — see how paying extra each month saves interest and shortens your loan.

Understanding Loan Payments

When you take out a loan, each monthly payment is split between principal (reducing your balance) and interest (the lender's fee for borrowing). In the early months, most of your payment goes toward interest. As the balance decreases, more of each payment goes toward principal. This process is called amortization.

The Loan Payment Formula

This calculator uses the standard amortization formula:

M = P × [r(1+r)n] / [(1+r)n - 1]

Where M = monthly payment, P = loan principal, r = monthly interest rate (annual rate / 12), and n = total number of payments (years × 12).

Types of Loans

This calculator works for any fixed-rate installment loan, including:

  • Personal loans — typically 3-7 years, 6-36% APR depending on credit score
  • Auto loans — typically 3-7 years, 4-12% APR for new cars
  • Student loans — 10-25 years, federal rates around 5-7%, private rates vary widely
  • Home equity loans — 5-30 years, rates typically 1-2% above mortgage rates

Tips to Reduce Your Loan Cost

The three most effective ways to pay less interest on a loan are: 1) Improve your credit score before applying to qualify for lower rates. 2) Choose the shortest term you can comfortably afford. 3) Make extra payments when possible — even small amounts add up significantly over time. For example, paying an extra $50/month on a $25,000 loan at 6.5% over 5 years saves $484 in interest and pays off the loan 5 months early.

Frequently Asked Questions

Monthly loan payments are calculated using the amortization formula: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the loan principal, r is the monthly interest rate (annual rate / 12), and n is the total number of payments. This formula ensures each payment covers both principal repayment and interest.
The interest rate is the cost of borrowing the principal amount. APR (Annual Percentage Rate) includes the interest rate plus other fees and costs associated with the loan (origination fees, closing costs, etc.), giving you a more complete picture of total borrowing cost. APR is typically higher than the base interest rate.
Shorter loan terms have higher monthly payments but save significantly on total interest paid. Longer terms have lower monthly payments but cost more overall. Choose based on what you can comfortably afford each month while minimizing total interest.
Extra payments go directly toward reducing your principal balance, which reduces the total interest you pay and shortens your loan term. Even small extra monthly payments can save hundreds or thousands over the life of the loan.
Generally, a credit score of 740+ qualifies for the best rates on most loan types. Scores of 670-739 get good rates, 580-669 get fair rates, and below 580 may face high rates or difficulty qualifying. Improving your credit score before applying can save thousands in interest.